The Unfortunate Truth About Domain Squatting

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(Last Updated On: July 13, 2017)

Domain squatting is the unfortunate result of anyone, at any time, being able to lay claim to any domain name of their choosing. Essentially, it’s when somebody purchases a domain with the intent of preventing others from purchasing it and/or profiting from the domain through the eventual reselling of it to desperate buyers.

Domain squatting has become quite a nuisance to businesses of all sizes. There are over 100 million .COM domains already registered, making it very difficult for small businesses to obtain the domain that they want. Domain squatters are also constantly trying to grab domains that may have something to do with a large company’s name, with the hope of selling said domain to the business for an insane profit. They are the pirates of the domain world.

Dealing with domain squatting has become a very convoluted and complicated process. In hopes of stopping domain squatters, specific laws have been put in place by some countries. For example, in 1999 the United States put the Anticybersquatting Consumer Protection Act (ACPA) in place. The purpose of these acts is to stop people from registering domains in bad faith.

Registering a domain in bad faith is a legal term that can be defined by:
– Registering a domain with the intention of selling it to a competitor for a profit
– Registering a domain to try and confuse/attract customers from a competitor’s business
– Registering a domain to try and block a trademark holder from obtaining the domain
– Registering a domain to try and disrupt the trademark holder’s business

Despite the many different legislative acts and laws in place around the world, domain squatting still plagues the Internet. The fact is, domain squatting can be a very, very profitable business. Michael Berkens, one of the world’s most infamous domain squatters, currently runs thedomains.com and moves over seven figures worth of domains every year. While there is not necessarily a way to avoid domain squatters entirely, there are ways to deal with them.

Domain Squatting: The legal process

Once you try to obtain a domain through the courts, you begin a long and painful process that may or may not end in your favor. When a domain squatter finds out that somebody is trying to take their domain name through legal means, they will more than likely fight harder for it, because they now know that it has value.

To start the reclamation process you need to either have a trademark on the name or be a person with a notable name (like a celebrity trying to claim their own name in domain form). If you don’t have either of these, you’ll have to try and obtain your domain name through other means.

To ensure that you actually have a case to reclaim a squatted domain you may want to talk to a lawyer and/or check ICANN (the governing body of many of the Internet’s properties). While building your case, it may also be a good idea to look at some sample decisions made by the Uniform Domain-Name Dispute-Resolution Policy (UDRP), to see if your case is similar to any previous cases.

Even the best-made cases can go awry. One of the best examples of this is when the actor, Kevin Spacey, tried to reclaim the domain name kevinspacey.com. Back in 2001, Kevin Spacey lost several court battles attempting to gain ownership of the domain mainly because the squatter resided in Canada, and Spacey was trying to fight in the United States. Eventually, Spacey was able to win his domain name after going to the National Arbitration Forum.

Even if you have a claim to a domain name, going through the legal process can be a long and difficult process. Many small businesses might not have the financial means or legal resources to fight these long battles and in the end, it might not be worth it. The most productive thing you can do is consult ICANN and the URDP to see if it would be viable to go after a domain name through the courts.

Domain Squatting: The ransom process

One of the worst feelings in the world has to be getting scammed. That’s how most people will probably feel when having to buy an overpriced domain from a domain squatter. The reality of the situation is, if a domain squatter owns the domain that you want, you will have very little claim on it, especially if you don’t have a trademark for the name.

If the domain is set a reasonable price it might be worth it to just buy the domain rather than go through the legal headache, which can become just as expensive if not more. If you look at a domain squatter’s website the average domain can sell for anywhere from $100 to $5000, sometimes less and sometimes much more.

The price of a domain name really depends on if the domain squatter thinks the name has value. For example, when the owners of the now popular journalism syndication site longform.org tried to buy the .com version of their URL from Michael Berkens, the asking price was $30,000! When asked why it cost so much Berkens told Gimlet Media, “It’s easy to remember it. It’s sticky, it’s memorable, it’s brandable, people have heard the expression before. That to me makes a valuable name”.

At the same time when looking at Berkens’ website, you can see many domains being sold for $69 or $80. It is really up to the domain squatter’s discretion if they think a domain name has value. Do some research and inquire how much the domain name might cost you. If it’s cheap enough it might be worth putting in an offer.

New gTLDs:

In 2016, ICANN added over 1,300 new gTLDs to the online world including .SONG, .STORE, .TUBE, etc. These new domain extensions offer many new opportunities for small businesses to procure the domain name they desire, but they also offer many opportunities for domain squatters to try and take advantage of businesses.

Let’s start with the bad. The long list of gTLDs gives domain squatters many more opportunities to hold on to domains with the intention of profiting. And nobody’s safe. Not even companies who sell domains like HostPapa!

Now for the good news. Since many small businesses don’t have the resources to obtain the domain they want with a .COM ending, the massive list of gTLDs that ICANN released gives new businesses many options for potential domain names. The list of domain extensions allows businesses to get creative with their domain name and find one that hasn’t already been taken. When the owners of longform.org found out that the asking price of longform.com was $30,000 they decided it wasn’t worth the price and stuck with a different domain extension, .org.

You may see several articles online with guides of how to “get around” domain squatters, but it’s never as simple as it sounds. The only way you can really get around a domain squatter is to not buy the domain that they are in possession of. Getting a new domain extension will save you a lot of time and money, but you won’t be getting the domain that you want and it probably won’t be as prominent as the one the domain squatter has.

On the other hand, if you decide to deal with a domain squatter it will take a lot of your time and resources, but you will have the domain that you actually want. Dealing with domain squatters is annoying, it’s a hassle, and it’s a headache, but at the end of the day, it’s not all hopeless.

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Ryan Juraschka

Ryan is a self-described geek. He's an avid gamer, a fan of science-fiction literature and an aspiring author and journalist. At HostPapa, he focuses on creating content to help small business owners make the most of their entrepreneurship experience.